General Electrichttp://www.businessinsider.com/category/general-electric
en-usSun, 02 Aug 2015 19:27:45 -0400Sun, 02 Aug 2015 19:27:45 -0400The latest news on General Electric from Business Insiderhttp://static3.businessinsider.com/assets/images/bilogo-250x36-wide-rev.pngBusiness Insiderhttp://www.businessinsider.com
http://www.businessinsider.com/ge-may-be-shipping-10-billion-worth-of-work-overseas-2015-7GE may be shipping $10 billion worth of work overseashttp://www.businessinsider.com/ge-may-be-shipping-10-billion-worth-of-work-overseas-2015-7
Thu, 30 Jul 2015 20:56:04 -0400David Lawder
<p><img style="float:right;" src="http://static2.businessinsider.com/image/55bac636371d2210008bb6ea-903-677/3581295898_399306660a_b.jpg" alt="General Electric sign" data-mce-source="Flickr/chuckthewriter" /></p><p>WASHINGTON (Reuters) - General Electric is taking steps to shift some U.S. manufacturing work overseas now that the U.S. Export-Import Bank will be shuttered at least until September, the industrial giant's global operations boss told Reuters on Thursday.</p>
<p>GE Vice Chairman John Rice said the conglomerate is bidding on over $10 billion worth of projects that require support from an export credit agency (ECA) like Ex-Im.</p>
<p>With Ex-Im unable to extend new loans or guarantees thanks to an effort by congressional Republicans to shut it down, GE is arranging with ECAs in other countries to finance the deals involved, with much of the production going to GE plants in those foreign locations. The prospective government partners include Canada, the United Kingdom, France, Germany, China and Hungary, he said.</p>
<p>"We're submitting the tenders now. So we are identifying where we'll bid this and the ECA support that comes with it, and it's not in the United States," Rice told Reuters in a telephone interview from Atlanta</p>
<p>Ex-Im has been unable to consider any new financing requests since Congress allowed the bank's charter to expire on June 30.</p>
<p>Rice's comments come as the U.S. Congress starts a five-week summer recess with no clear path to revive Ex-Im in the months ahead. A group of conservative Republicans, who say the 81-year-old trade bank is a nest of "crony capitalism" that doles out government welfare to GE, Boeing Co and other wealthy corporations, want to keep it closed for good.</p>
<p>An effort to revive the bank as part of a multi-year transportation bill won strong support in the U.S. Senate, but stalled this week when the House of Representatives approved a short-term funding extension without the Ex-Im provision.</p>
<p><img style="float:right;" src="http://static6.businessinsider.com/image/5463f1355afbd350718b4567-793-600/ge-says-infrastructure-demand-to-boost-orders-for-developing-markets.jpg" alt="John Rice speaks during the Reuters Manufacturing and Transportation Summit in Chicago May 11, 2010. REUTERS/John Gress" data-mce-source="Thomson Reuters" data-mce-caption="General Electric Co. Vice Chairman, CEO of GE Technology Infrastructure unit Rice speaks during the Reuters Manufacturing and Transportation Summit in Chicago" />Boeing chairman Jim McNerney on Wednesday said the aircraft maker was actively looking at moving "key pieces" of its operations to other countries that could offer export credits.</p>
<p>Rice, who is based in Hong Kong, said GE is not moving to shift work and jobs overseas "just to make a point" to Congress, but to win contracts that require export credit agency support. "We're doing this because if we don't, we can't submit a valid tender," he said.</p>
<p>In one such power-sector bid, for example, GE would do final assembly work on its aero-derivative gas turbine power generation units at GE plants in Hungary or China instead of a factory in Houston. It already has capacity in place, and export credit agencies willing to support the work, he said.</p>
<p>"Next year, if we win this bid, work that would have been in Houston will be someplace else," Rice said.</p>
<p>GE also is seeking financing from another country's export credit agency to save a $350 million locomotive deal with Angola that has lost access to Ex-Im support, Rice said.</p>
<p>Ex-Im opponents say the private sector will innovate to fill any void left by Ex-Im. "The sky hasn't fallen" since Ex-Im halted lending, Ted Cruz, the Republican senator and presidential candidate, said earlier this month.</p>
<p>But Rice said more business will move overseas if Ex-Im stays dead.</p>
<p>"The people who are on the other side of this don't really understand how global business is conducted," he said. "They don't want to understand it."</p><p><a href="http://www.businessinsider.com/ge-may-be-shipping-10-billion-worth-of-work-overseas-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/qualities-bad-leader-micromanagement-complaining-2015-6">4 things a leader should never do</a></p> http://www.businessinsider.com/facebook-market-cap-now-larger-than-general-electric-2015-7Facebook is now more valuable than General Electrichttp://www.businessinsider.com/facebook-market-cap-now-larger-than-general-electric-2015-7
Tue, 21 Jul 2015 09:32:23 -0400Sam Ro
<p><img style="float:right;" src="http://static5.businessinsider.com/image/536bb7d2ecad04214f33ed19-1000-750/thomas-edison-13.jpg" alt="Thomas Edison" data-mce-source="AP Photo/J. Walter Thompson"></p><p>General Electric's origins go back to the days of Thomas Edison and JP Morgan himself. It's the only component of the Dow Jones Industrial Average today that was part of <a href="http://www.businessinsider.com/original-companies-on-the-dow-jones-industrial-average-2015-3">the original Dow in 1896</a>.</p>
<p>GE's market cap sits at around $273 billion.</p>
<p>Facebook's origins go back to a Harvard dorm room a little over ten years ago. The social media company reaches a whopping <a href="http://www.businessinsider.com/facebook-earnings-q1-2015-2015-4">1.44 billion monthly active users</a>.</p>
<p>As <a href="https://twitter.com/atlascharts/status/623216249896615936">Matt Phillips notes</a>, Facebook now has a market cap of $275 billion.</p>
<p>In other words, it is now bigger than GE.</p>
<p>For what it's worth:</p>
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Facebook is now bigger than General Electric <a href="http://t.co/iERfPlgOG1">http://t.co/iERfPlgOG1</a>
Chart: <a href="http://t.co/2GW849dqPI">http://t.co/2GW849dqPI</a> <a href="http://t.co/woqI6haoyz">pic.twitter.com/woqI6haoyz</a> </p>— Atlas (@atlascharts) <a href="https://twitter.com/mims/statuses/623216249896615936">July 20, 2015</a>
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<p class="embed-spacer"> </p><p><a href="http://www.businessinsider.com/facebook-market-cap-now-larger-than-general-electric-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/sharks-spotted-coast-england-2015-7">People were baffled by 50 sharks circling in shallow waters off the English coast</a></p> http://www.businessinsider.com/r-cost-controls-buoy-ge-honeywell-amid-economic-pressures-2015-7GE's cost-cutting is paying offhttp://www.businessinsider.com/r-cost-controls-buoy-ge-honeywell-amid-economic-pressures-2015-7
Fri, 17 Jul 2015 18:50:00 -0400Lewis Krauskopf
<p><img style="float:right;" src="http://static2.businessinsider.com/image/558dcf175afbd31f1c8b4567-450-300/canadas-element-financial-close-to-ge-fleet-asset-purchase-sources.jpg" alt="The logo of General Electric is pictured at the 26th World Gas Conference in Paris, France, June 2, 2015. REUTERS/Benoit Tessier " border="0" /></p><p>(Reuters) - General Electric and Honeywell International beat expectations for their latest quarterly results on Friday as ongoing cost-cutting efforts paid off with profit margin increases that impressed Wall Street analysts.</p>
<p>At a time multinational industrial manufacturers face pressure from foreign currency swings and weak oil and gas markets, GE and Honeywell also showed the benefits of being diversified with pockets of strength in areas such as aerospace.</p>
<p>"Any multinational company in this environment is seeing very little organic revenue growth and revenue growth declines when you account for currency weakness," said Jim Corridore, an equity analyst at S&amp;P Capital IQ. "So you have to find a way to offset that."</p>
<p>GE shares were up 0.9 percent and Honeywell shares rose 1.7 percent in afternoon trade, outperforming U.S. markets, which weakened slightly.</p>
<p>Wall Street was encouraged that both companies posted revenue increases excluding currency swings: 5 percent for GE and 3 percent for Honeywell.</p>
<p>But the companies also demonstrated they could wring more profits from those sales. GE's industrial profit margin expanded to 16.2 percent from 15.5 percent a year ago, while Honeywell's margin rose to 18.4 percent from 16.7 percent.</p>
<p>GE's total costs and expenses were flat compared with a year ago, despite a 1.5 percent sales increase.</p>
<p>After focusing on sales and administrative costs, GE more recently started a drive to increase gross product margins. That includes driving down material prices and becoming more efficient with manufacturing operations, GE Chief Financial Officer Jeff Bornstein said in an interview.</p>
<p>"What we are trying to get is more output for the same or less cost, and on a product-specific basis how do we have the most cost-competitive products in the world," he said.</p>
<p>Bornstein said GE was ahead of its plan to remove $600 million in costs this year for its oil and gas division. Indeed, even though GE's oil revenue slumped 15 percent, the division's operating profit fell by a less-severe 12 percent.</p>
<p>"When things are getting more competitive, your ability to get costs out of your product or your services is absolutely critical," he said.</p>
<p>In an example of Honeywell seeking more efficiency, Chief Financial Officer Tom Szlosek said it is examining ways to design products that require less material or fewer components.</p>
<p>"I wouldn&rsquo;t say that we&rsquo;re out to cut costs," Szlosek said in an interview. "We&rsquo;re out to operate our enterprise more efficiently, and in a more economic way."</p>
<p>(Editing by Peter Galloway)</p><p><a href="http://www.businessinsider.com/r-cost-controls-buoy-ge-honeywell-amid-economic-pressures-2015-7#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/r-general-electric-posts-5-percent-rise-in-industrial-profit-2015-7General Electric beats on earnings (GE)http://www.businessinsider.com/r-general-electric-posts-5-percent-rise-in-industrial-profit-2015-7
Fri, 17 Jul 2015 06:41:53 -0400Lewis Krauskopf
<p><img style="float:right;" src="http://static4.businessinsider.com/image/55a8dce35afbd3cf688b456c-450-300/general-electric-posts-5-percent-rise-in-industrial-profit.jpg" alt="A GE logo is seen in a store in Santa Monica, California, October 11, 2010. REUTERS/Lucy Nicholson " border="0" /></p><p>(Reuters) - General Electric Co said on Friday that its quarterly industrial profits rose 5 percent, as stronger performance in its power division offset weak oil segment results, and the company raised its 2015 outlook for its industrial manufacturing businesses.</p>
<p>GE posted a second-quarter net loss of $1.36 billion, or 13 cents per share. Results were weighed down by charges related to GE's massive pullback from its financial services businesses announced in April.&nbsp;</p>
<p>The stock rose 2% in premarket trading.</p>
<p>(Reporting by Lewis Krauskopf in New York Editing by W Simon)</p><p><a href="http://www.businessinsider.com/r-general-electric-posts-5-percent-rise-in-industrial-profit-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/science-smart-iq-intelligence-2015-7">How to figure out if you're smart</a></p> http://www.businessinsider.com/jack-welchs-leadership-lessons-2015-6Jack Welch shares 10 leadership lessons you don't want to learn the hard wayhttp://www.businessinsider.com/jack-welchs-leadership-lessons-2015-6
Mon, 22 Jun 2015 10:36:00 -0400Jack Welch
<p><img style="float:right;" src="http://static1.businessinsider.com/image/55845fa86da811a8770d63fc-600-/jack-welch-20.jpg" border="0" alt="jack welch" width="600"></p><p>If you've ever managed people, chances are you've had your share of sure-fire leadership successes, along with a few tough missteps and "wish I had knowns" — and probably learned a thing or two from all of three.</p>
<p class="p1">In no particular order, here are a few essential threads of wisdom we've collected over the years to add to your playbook.</p>
<p class="p1">Let's save you from having to figure them out on your own in 2015.</p>
<ul class="ul1">
<li class="li2">Your company's values and your personal values must be compatible.</li>
</ul>
<ul class="ul1">
<li class="li2">Differentiation breeds meritocracy. Sameness breeds mediocrity.</li>
</ul>
<ul class="ul1">
<li class="li2">In a performance culture, actions have to have consequences — positive or negative.</li>
</ul>
<ul class="ul1">
<li class="li2">Creating an environment of candor and trust is a must.</li>
</ul>
<ul class="ul1">
<li class="li2">Attracting, developing and retaining world-class talent is your never-ending job.</li>
</ul>
<ul class="ul1">
<li class="li2">You must distinguish between coachable development needs in your people and fatal flaws.</li>
</ul>
<ul class="ul1">
<li class="li2">Simple, consistent, focused communications travel faster and are understood better by the organization.</li>
</ul>
<ul class="ul1">
<li class="li2">There is nothing more developmental and illuminating than dealing with adversity.</li>
</ul>
<ul class="ul1">
<li class="li2">Over time, you have to develop a real generosity gene — and love to see each person on your team earn raises, get promotions and grow personally.</li>
</ul>
<ul class="ul1">
<li class="li2">Continuous learning is critical for success — make it a priority.</li>
</ul>
<p><em><em>Jack Welch is executive chairman of the&nbsp;<span><a href="http://jackwelch.strayer.edu/" target="_blank">Jack Welch Management Institute</a></span>&nbsp;at&nbsp;<span><a href="http://www.strayer.edu/" target="_blank">Strayer University</a></span>.&nbsp;Through its&nbsp;<span><a href="http://jackwelch.strayer.edu/executive-mba" target="_blank">online MBA</a></span>&nbsp;program, the Jack Welch Management Institute provides students and organizations with the proven methodologies, immediately actionable practices, and respected credentials needed to win in business.</em></em></p>
<p><em>Jack and Suzy Welch are co-authors of the new book, "<a href="http://www.amazon.com/gp/product/0062362801/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0062362801&amp;linkCode=as2&amp;tag=thebusiinsi-20&amp;linkId=LZIIWZO7CWGSFCTG" target="_blank">The Real-Life MBA: Your No-BS Guide to Winning the Game, Building a Team, and Growing Your Career</a>," which debuted as a #1 Wall Street Journal and Washington Post best-seller.</em></p>
<h3>More From Jack Welch:</h3>
<ul>
<li><a href="https://www.linkedin.com/pulse/one-thing-leader-cant-live-without-jack-welch?trk=mp-reader-card">Leaders, give yourself this mirror test</a></li>
<li><a href="https://www.linkedin.com/pulse/how-promotable-you-jack-welch">How promotable are you?</a></li>
<li><a href="https://www.linkedin.com/pulse/six-secrets-success-work-jack-welch">Six secrets to success at work</a></li>
</ul><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/jack-welch-explains-how-to-get-a-promotion-2015-6" >Jack Welch explains the 2 traits that will get you promoted</a></strong></p>
<p><a href="http://www.businessinsider.com/jack-welchs-leadership-lessons-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/mark-cuban-401k-investing-shark-tank-2015-5">Mark Cuban explains why a 401(k) is a no-brainer</a></p> http://www.businessinsider.com/largest-companies-revenue-every-state-america-2015-6This animated map shows the largest company by revenue for every statehttp://www.businessinsider.com/largest-companies-revenue-every-state-america-2015-6
Thu, 11 Jun 2015 09:22:00 -0400Alex Kuzoian
<p><a href="http://www.broadviewnet.com/blog/2015/06/largest-companies-by-revenue-in-each-state-2015-map/"></a></p>
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<p><a href="http://www.broadviewnet.com/blog/2015/06/largest-companies-by-revenue-in-each-state-2015-map/"></a></p>
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<p><a href="http://www.broadviewnet.com/blog/2015/06/largest-companies-by-revenue-in-each-state-2015-map/">Broadview Networks</a><span style="line-height: 1.5em;"> mapped out the largest company in every state based on data provided by Hoover's. Check out who made the list.</span></p>
<p><em>Produced by Alex Kuzoian</em></p>
<p><strong>Follow BI Video: </strong><a href="https://www.facebook.com/BusinessInsider.Video">On Facebook</a></p><p><a href="http://www.businessinsider.com/largest-companies-revenue-every-state-america-2015-6#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/the-government-is-forcing-wall-street-banks-to-break-apart--and-these-are-the-companies-profiting-2015-6The government is forcing Wall Street banks to break apart — and these are the companies profiting (GS, BAC, JPM, GE, BX, DB, C)http://www.businessinsider.com/the-government-is-forcing-wall-street-banks-to-break-apart--and-these-are-the-companies-profiting-2015-6
Wed, 10 Jun 2015 14:04:17 -0400Jonathan Marino
<p><img style="float:right;" src="http://static6.businessinsider.com/image/5578785f6bb3f74d60f731a9-773-579/jamie-dimon-58-3.png" border="0" alt="jamie dimon 58"></p><p></p>
<p>In the wake of the financial crisis, some of Wall Street's biggest banks were forced to start chopping off valuable assets to satisfy regulators intent on stamping out another "Too Big to Fail" crisis.&nbsp;</p>
<p>Now firms including Deutsche Bank and HSBC are facing calls to streamline their businesses. <span>Even&nbsp;</span><a href="http://www.businessinsider.com/r-breaking-up-jpmorgan-could-lift-its-stock-price-goldman-analyst-says-2015-1">JP Morgan</a><span>&nbsp;and&nbsp;</span><a href="http://www.businessinsider.com/michael-lewis-break-up-goldman-sachs-2013-2">Goldman Sachs</a><span>&nbsp;have heard calls for breakups.&nbsp;</span></p>
<p>In some cases calls to reduce exposure to ancillary businesses stems from regulators' demands. But big banks also continue to face pressure from investors looking to get a better return on equity from the biggest banks in the country. In part due to the new regulations banks face, their return on equity is about one-third lower on average than it was in the years leading up to the financial crisis.</p>
<p>That has translated into an opportunity for less-regulated subprime lenders, private equity firms and other investors. Companies that are not regulated as the big banks are have enjoyed a disproportionate chance to build their businesses. Here are a few examples:</p>
<ul>
<li><span style="line-height: 1.5em;"><strong>General Electric</strong> is carefully dismantling its <strong>GE Capital</strong> business in accordance with its plans to satisfy regulators and remove itself from their list of "systemically important financial institutions," or SIFIs. That includes cleaving off more than $26 billion in real estate assets and also selling its private equity lending business. <strong>The Blackstone Group</strong> bought GE's real estate portfolio and the <strong>Canada Public Pension Investment Board</strong> bought the lending business. In the wake of the financial crisis, Blackstone's real estate portfolio has expanded significantly.&nbsp;</span></li>
<li><span style="line-height: 1.5em;">Blackstone isn't the only US private equity firm to make big deals from unbundling banks. <strong>Apollo Global Management</strong> twice snapped up European assets from <strong>Bank of America</strong>. This includes a 2011 purchase of the bank's Spanish consumer credit card assets and Apollo's 2012 acquisition of BofA's Irish consumer credit card portfolio.&nbsp;</span></li>
<li><span style="line-height: 1.5em;">When <strong>Springleaf Holdings</strong> bought <strong>OneMain Financial</strong> from <strong>Citigroup</strong>&nbsp;for more than $4 billion earlier this year, it created the <a href="http://www.reuters.com/article/2015/03/03/us-onemainfinancial-m-a-springleaf-hldgs-idUSKBN0LZ14920150303">largest subprime lender in the United States</a>.&nbsp;</span></li>
<li><span style="line-height: 1.5em;"><strong>JP Morgan</strong> last year sold off its large-market 401(k) recordkeeping business to <strong>Great-West Financial</strong>, part of Canadian financial services conglomerate Great-West Lifeco.&nbsp;</span></li>
<li><span style="line-height: 1.5em;"><strong>JP Morgan</strong> also sold its physical commodities trading business to <strong>Mercuria</strong>, a Swiss energy investor formed by ex-Goldman traders. The transaction also represented <a href="http://www.wsj.com/articles/mercuria-announces-close-of-j-p-morgan-commodities-deal-1412356075">a steep discount</a> to JP's initial asking price. &nbsp;</span></li>
<li><span style="line-height: 1.5em;">Also last year, <strong>JP Morgan</strong> dealt a stake in its&nbsp;<strong>One Equity</strong> <a href="http://fortune.com/2014/05/02/exclusive-j-p-morgan-nears-sale-of-private-equity-assets/">in-house PE firm </a>to <strong>Lexington Partners</strong>, a multi-billion dollar secondary market investor.&nbsp;</span></li>
</ul>
<p><span style="line-height: 1.5em;">But there are plenty more spin-offs from banks — and likely, more to come. What remains to be seen is whether other bidders will play coy like Mercuria in order to squeeze sellers on price.&nbsp;</span></p><p><a href="http://www.businessinsider.com/the-government-is-forcing-wall-street-banks-to-break-apart--and-these-are-the-companies-profiting-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/new-omega-globemaster-watch-unboxing-2015-5">Forget the Apple Watch — here's the new watch everyone on Wall Street wants</a></p> http://www.businessinsider.com/this-boutique-bank-just-wrestled-another-monster-deal-away-from-its-bigger-competitors-2015-6A boutique bank just wrestled another monster deal away from the big boys (GS, BAC, GE, CMCSA, TWC)http://www.businessinsider.com/this-boutique-bank-just-wrestled-another-monster-deal-away-from-its-bigger-competitors-2015-6
Wed, 10 Jun 2015 09:57:00 -0400Jonathan Marino
<p><img style="float:right;" src="http://static6.businessinsider.com/image/5578421feab8ea023747eb91-1200-924/blair-effron-centerview-partners-5.png" border="0" alt="Blair Effron, Centerview Partners"></p><p>Centerview Partners is advising Johnson Controls on a spinoff that could be worth $20 billion.</p>
<p>Once again, it's an example of a boutique bank elbowing way bigger competitors aside and laying claim to a mandate that used to belong to a larger adviser.</p>
<p>This time the boutique bank is Centerview. It's advising Johnson Controls, a diversified technology company that is sharpening its focus on things such as batteries and continuing to dump assets in its automotive segment. Johnson Controls has already sold off assets including its <a href="http://www.jsonline.com/business/johnson-controls-completes-700-million-sale-of-homelink-to-gentex-b99108397z1-225557392.html">garage-door-opener unit</a> and its sun-visor product line.</p>
<p>As recently as last year, Johnson Controls was using Bank of America Merrill Lynch as its adviser. But when it announced plans to effectively split its automotive segment off from the rest of its business, the company created an opportunity for a bank to claim a mandate on a sale that could be worth nearly $20 billion.</p>
<p>For Centerview Partners and Goldman Sachs it potentially means splitting up fees worth more than $100 million in the event of a sale — less if it's an IPO.</p>
<p>Though first-half numbers have yet to be tallied, it looks as if Centerview Partners will claim the top spot on banking league tables of all boutiques. Since the financial crisis, smaller banks have been claiming a <a href="http://www.businessinsider.com/boutique-banks-are-taking-big-deals-from-wall-streets-biggest-banks-2015-3">bigger share of M&amp;A</a> on Wall Street.</p>
<p>Centerview has claimed mandates on transactions including <a href="http://www.businessinsider.com/centerview-partners-wins-advisory-fees-on-another-deal-2015-4">General Electric's $26.5 billion real-estate sale</a> and the now scuttled Time Warner Cable-Comcast deal.</p>
<p>Right now dealmaking is <a href="http://www.businessinsider.com/ma-is-back--and-its-being-fueled-by-mega-transactions-2015-4">back at peak levels</a> not seen since 2007. For boutiques such as Centerview, PJT Partners, and LionTree, it means an opportunity to leap up league tables.</p>
<p>The bank did not respond to a request for comment.</p><p><a href="http://www.businessinsider.com/this-boutique-bank-just-wrestled-another-monster-deal-away-from-its-bigger-competitors-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/excel-what-if-analysis-data-tables-2015-4">This is the Excel trick that will change everything about how you work with data</a></p> http://www.businessinsider.com/the-governments-too-big-to-fail-list-is-going-to-change-2015-6The government's 'Too Big to Fail' list is going to change (GE, PRU)http://www.businessinsider.com/the-governments-too-big-to-fail-list-is-going-to-change-2015-6
Tue, 09 Jun 2015 11:50:48 -0400Jonathan Marino
<p><img style="float:right;" src="http://static4.businessinsider.com/image/557709f969bedd5f3b45a3dc-1200-924/immelt-5.jpg" border="0" alt="immelt"></p><p>The list of "systemically important financial institutions" is about to get smaller for the first time.&nbsp;<span style="line-height: 1.5em;">Just don't count on it getting <em>much</em> smaller.&nbsp;</span></p>
<p><span style="line-height: 1.5em;">Being a "SIFI" on Wall Street has become the equivalent of receiving a scarlet letter. Especially for non-bank SIFIs, because much of their business is based in activities that do not allow them to profit as much as Wall Street banks.</span></p>
<p>Tuesday's <a href="http://www.businessinsider.com/general-electric-is-selling-its-12-billion-private-equity-business-2015-6">sale of General Electric's private equity financing</a> business to a Canadian pension is the latest step in GE's <span>quest to de-designate from the government's SIFI list by selling businesses it has valued at nearly $200 billion.</span>&nbsp;</p>
<p><span style="line-height: 1.5em;">Other non-bank SIFIs include insurers MetLife and Prudential Financial, as well as AIG. Regulators have even reportedly considered <a href="http://blogs.wsj.com/moneybeat/2015/04/22/is-berkshire-hathaway-a-threat-to-the-financial-system/">including Warren Buffett's Berkshire Hathaway</a> in the category.&nbsp;</span></p>
<p><span>Both MetLife and Prudential are paying close attention to GE's great un-bundling with hopes that they can also change their lines of business to attract less government attention. But they face tougher odds.</span></p>
<p><span>"MetLife and Prudential can succeed [in escaping SIFI] only if they agree to to do what they won't agree to do: invest only in publicly-traded, high-rated instruments or break into small pieces," says Erik Gordon, a banking and regulation expert and professor at the University of Michigan's Ross School of Business.&nbsp;</span><span style="line-height: 1.5em;">"Otherwise they are too big and too entwined to escape SIFI."</span></p>
<p>The SIFI list originated in the wake of the financial crisis, as regulators grasped for ways to rein in 'too big to fail' institutions. Largely thanks to its financing arm, GE found itself under unexpected pressure during the financial crisis and the SIFI designation is meant to prevent it and others from failing in the next market event through increased oversight.&nbsp;</p>
<p><img src="http://static4.businessinsider.com/image/557709c569bedd363d45a3da-932-338/screen shot 2015-06-09 at 9.50.53 am.png" border="0" alt="GE assets chart"></p>
<p><span style="line-height: 1.5em;"><span>After it has sold off the businesses that made it so systemically important, General Electric will have to&nbsp;</span><span></span><a href="http://www.treasury.gov/initiatives/fsoc/designations/Pages/nonbank-faq.aspx#4">endure the same lengthy process&nbsp;</a>with the&nbsp;<span>Treasury Department's Financial Stability Oversight Council&nbsp;</span><span>that got it designated as a SIFI in the first place.&nbsp;<span>By 2016, GE expects to be mostly out of financial services — and off the government's SIFI list.</span></span></span></p><p><a href="http://www.businessinsider.com/the-governments-too-big-to-fail-list-is-going-to-change-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/excel-what-if-analysis-data-tables-2015-4">This is the Excel trick that will change everything about how you work with data</a></p> http://www.businessinsider.com/general-electric-is-selling-its-12-billion-private-equity-business-2015-6General Electric is selling its $12 billion private-equity businesshttp://www.businessinsider.com/general-electric-is-selling-its-12-billion-private-equity-business-2015-6
Tue, 09 Jun 2015 09:38:00 -0400
<p><img style="float:right;" src="http://static3.businessinsider.com/image/552bddb66bb3f75d14bd5121-603-452/general-electric-10.png" border="0" alt="general electric"></p><p></p>
<p>General Electric will sell its private-equity business in a deal valued at about $12 billion as it refocuses on its core businesses and exits a banking sector now under stricter oversight.</p>
<p>The US Sponsor Finance business, which includes Antares Capital, GE Capital's lending business to private-equity-backed middle market companies, will be sold to the Canada Pension Plan Investment Board, alongside a $3 billion bank-loan portfolio.</p>
<p>GE is looking to sell most of the assets of its $500 billion GE Capital over the next 18 months but plans to keep the financing components that relate to its industrial businesses. The Fairfield, Connecticut, company is transforming itself back into an industrial conglomerate that makes large, complicated equipment for other businesses.</p>
<p>Investors had long pushed for GE to get rid of its finance unit, though it had been extremely profitable, as federal regulations and tough market conditions made it less lucrative and, at times, more risky.</p>
<p>GE spun off its consumer credit-card business, Synchrony Financial, into a separate publicly traded company in July. It sold a 51% stake of NBC Universal to Comcast Corp. for $13.75 billion in 2011. Two years later, Comcast bought GE's remaining 49% stake in NBC Universal for $16.7 billion.</p>
<p><img src="http://static3.businessinsider.com/image/5575b3566bb3f7d426e1f014-1200-800/gettyimages-138888106.jpg" border="0" alt="Jeff Immelt GE"></p>
<p>General Electric Co. spun off its insurance business into a separate publicly traded company, Genworth Financial Inc., in 2004. It sold its reinsurance business to Swiss Re in 2006 and a year later sold its plastics business to Saudi Basic Industries Corp. GE sold silicones to the private investment group Apollo Management LP for $3.8 billion in 2006 and sold its security business to United Technologies for $1.82 billion in 2010.</p>
<p>GE said Tuesday that it was on pace to execute sales of $100 billion by the end of the year.</p>
<p>The US Sponsor Finance transaction is targeted to close in 2015's third quarter.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/burlington-q1-earnings-june-9-2015-6" >Burlington Stores just announced a sales miss and wage hike, and now the stock is getting slammed</a></strong></p>
<p><a href="http://www.businessinsider.com/general-electric-is-selling-its-12-billion-private-equity-business-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/kids-reveal-billion-dollar-app-ideas-2014-12">We Asked Kids To Come Up With A Billion-Dollar App Idea</a></p> http://www.businessinsider.com/jack-welch-explains-why-ges-massive-restructuring-might-be-a-good-thing-2015-5Why Jack Welch says he's OK with GE's plans to sell off part of his legacy (GE)http://www.businessinsider.com/jack-welch-explains-why-ges-massive-restructuring-might-be-a-good-thing-2015-5
Wed, 13 May 2015 19:09:02 -0400Eugene Kim
<p><span style="line-height: 1.5em;"><img style="float:right;" src="http://static3.businessinsider.com/image/5553d1deecad04901afda37c-1200-924/jack-welch--ap-11.jpg" border="0" alt="Jack-Welch / AP">When General Electric announced its massive <a href="http://www.businessinsider.com/r-ge-close-to-selling-part-or-all-of-its-real-estate-holdings-wsj-2015-4">restructuring plan last month</a>, unloading most of the GE Capital assets, <a href="http://blogs.reuters.com/breakingviews/2015/04/10/ge-finally-exorcises-jack-welchs-financial-demons/">Reuters described it</a> as “exorcising the financial demons of Jack Welch.”</span></p>
<p>That's because Welch was responsible for building GE Capital, the giant finance unit that has become a huge risk and burden <a href="http://www.wsj.com/articles/ge-prepared-to-exit-the-bulk-of-ge-capital-1428662109">to the company in recent years</a>. In some ways, it marked the end of one of the legacies Welch had built during his 20-year run as CEO.</p>
<p>Yet Welch isn't taking it personally. In fact, when we spoke with Welch at an event this week, the former CEO seemed to endorse the company's move, calling it a welcome change that GE needed after all.</p>
<p>“GE’s the only company that was on the original Dow Jones list and still exists there, and it did it because it changes all the time with the times,” Welch told Business Insider during an event to promote his new book, "The Real-Life MBA."&nbsp;</p>
<p>“I don’t know the details - I’ve never been back to GE in 15 years - but I do think change is good. GE’s been able to do that for 120 years,” he added.</p>
<p>He noted that other parts of his legacy remain intact and integral to the company. "I built medical systems, the management system, transportation; Those were all my businesses."</p>
<p>Welch also pointed out the same thing happened when he was at GE for two decades. As CEO, Welch facilitated a massive reorganization plan, spinning off roughly 200 businesses and making 370 acquisitions, while drastically cutting down the size of its workforce. In fact, <a href="http://www.businessweek.com/2000/00_50/b3711014.htm">he was called “Neutron Jack”</a> for laying off so many people while leaving the office buildings in place.</p>
<p>But Welch also stressed it’s the macroeconomic conditions that made GE Capital a less attractive business. Indeed, after the 2008 financial crisis, the government has imposed heavier regulations on big financial institutions, such as GE Capital, which is the country’s seventh largest bank, <a href="http://www.nytimes.com/2015/04/11/business/dealbook/do-it-all-era-ending-as-ge-returns-to-core.html?rref=collection%2Fcolumn%2Fcommon-sense&amp;_r=0">making it harder to generate huge profits</a> as it did in the past. It made GE stock less attractive and its share price has been stuck below $30 for years.</p>
<p>“The rules have changed the playing field,” Welch said.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/r-ge-close-to-selling-part-or-all-of-its-real-estate-holdings-wsj-2015-4" >GE is spinning out most of its $500 billion GE Capital business, selling its $26.5 billion real-estate portfolio, and planning a $50 billion buyback</a></strong></p>
<p><a href="http://www.businessinsider.com/jack-welch-explains-why-ges-massive-restructuring-might-be-a-good-thing-2015-5#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/amazon-prime-terms-cost-2015-4">Here's how much you have to buy to make Amazon Prime worth it</a></p> http://www.businessinsider.com/how-ge-is-building-the-connected-city-2015-5How GE is building the connected cityhttp://www.businessinsider.com/how-ge-is-building-the-connected-city-2015-5
Thu, 07 May 2015 15:15:00 -0400Jonathan Camhi
<div id="categorypromo" style="border: 1px solid silver; min-height: 114px; padding: 4px;"><a href="http://www.businessinsider.com/intelligence/insider-newsletter?&amp;utm_source=House&amp;utm_term=CtgrPr_IOTI&amp;utm_campaign=CtgrPr_nlsa"><img src="http://static1.businessinsider.com/image/5484aec66bb3f76676626cad-150/.png" border="0" style="float: left; margin-right: 8px;"></a> This post originally appeared in <strong>IoT INSIDER</strong>, a daily newsletter on the internet of things industry produced by <strong>BI Intelligence</strong>, a premium research service from Business Insider. <a href="http://www.businessinsider.com/intelligence/insider-newsletter?&amp;utm_source=House&amp;utm_term=CtgrPr_IOTI&amp;utm_campaign=CtgrPr_nlsa">Learn more</a> about IoT INSIDER or <a href="http://www.businessinsider.com/intelligence/insider-newsletter?&amp;utm_source=House&amp;utm_term=CtgrPr_IOTI&amp;utm_campaign=CtgrPr_nlsa">sign up today</a> to receive the next issue in your inbox. <strong><a href="http://www.businessinsider.com/intelligence/insider-newsletter?&amp;utm_source=House&amp;utm_term=CtgrPr_IOTI&amp;utm_campaign=CtgrPr_nlsa">Get started now »</a></strong></div>
<p><img style="float:right;" src="http://static4.businessinsider.com/image/554baf0369bedde54613896a-1200-924/bii estimated number of installed iot devices by sector -1.png" border="0" alt="bii Estimated Number of Installed IoT Devices by Sector "></p>
<p>Streetlights will be the network for the future of connected cities, Beth Comstock, President and CEO of GE’s Business Innovations unit, said earlier this week. By connecting streetlights to the internet and embedding sensors in them, GE is working with cities to gain loads of new data on vehicle and pedestrian traffic along their roadways.</p>
<p>“Lighting is the gateway to connectivity: all of these light sockets are an infrastructure that can be connected,” Comstock said at GE’s Connected Future event in New York City.</p>
<p>GE is working with San Diego, California and Jacksonville, Florida on smart street lighting pilots. San Diego has already deployed 4,000 smart LED street lights equipped with video monitors, David Graham, San Diego’s deputy COO for neighborhood services, told the audience. The city is using the video monitors to track parking spaces in the city, and has launched a new mobile app for residents to find the nearest parking spaces.</p>
<p>Data from the video monitors is sent back to GE’s Predix cloud platform, which applies detection algorithms that tell when a car parks in a space and when it leaves. GE has invested more than $1 billion in the platform, and is looking to open it up to developers to create new apps for smart city solutions.</p>
<p>The video monitors also provide data to track pedestrian traffic during big events. When tens of thousands descend on San Diego for Comic Con, the video monitors will help the city adjust vehicle traffic for the massive increase in pedestrians.</p>
<p>The smart LED streetlights also provide better energy efficiency: Graham says that the 4,000 deployed in San Diego are&nbsp;saving the city $250,000 annually on electricity.<span>&nbsp;</span></p>
<p>Jacksonville has just begun to pilot smart streetlights with GE on a couple of streets that have historically been bad for parking, according to Jim Robinson, the city’s director of public works. The city is looking to expand their use, particularly for gathering real-time data in a spread out<strong>&nbsp;</strong>city.</p>
<p>“We have a very large land mass: about 840 square miles. From a public works perspective, we have very few workers for so much land,” Robinson said. “What I’m concerned about is what we don’t know. In particular with safety issues, we want to know about it quickly to respond.”&nbsp;</p><p><a href="http://www.businessinsider.com/how-ge-is-building-the-connected-city-2015-5#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/source-jana-partners-has-moved-40-of-its-positions-into-activist-stakes-2015-5This multi-billion dollar hedge fund has moved 40% of its positions into activist stakes, says sourcehttp://www.businessinsider.com/source-jana-partners-has-moved-40-of-its-positions-into-activist-stakes-2015-5
Thu, 07 May 2015 14:39:00 -0400Jonathan Marino
<p><img style="float:right;" src="http://static2.businessinsider.com/image/554b954ceab8ea0407fbd145-1194-896/barry-rosenstein-10.png" alt="Barry Rosenstein" border="0"></p><p>JANA Partners, the hedge fund managing more than $10 billion in capital, thinks it has a bright future in pushing CEOs and corporate boards to improve for the better.&nbsp;</p>
<p><span>According to a source that met with JANA employees, the firm has invested nearly 40% of its current positions in activist stakes. The source didn't disclose where JANA has parked cash, on a company-by-company basis.&nbsp;</span></p>
<p>Part of the fund's thinking, according to the source, is that private equity funds with pent-up cash will start spending, which could lead to a spate of LBOs and carve-out deals, like the <a href="http://www.businessinsider.com/private-equity-property-land-grabs-2015-4">enormous Blackstone-General Electric deal</a> earlier this year.&nbsp;</p>
<p>This doesn't necessarily mean JANA has spent $4 billion loading up on stocks and pushing for change — the source admitted he doesn't know how big JANA's cash reserves are outside of the fund's investments. Some of JANA's <a href="https://marketrealist.imgix.net/uploads/2014/11/JANAtop101.png?w=660&amp;fit=max&amp;auto=format">recent stakes</a> include eBay, PetSmart, <a href="http://www.bloomberg.com/news/articles/2015-02-04/jana-s-rosenstein-said-to-see-hertz-able-to-repurchase-shares">Hertz</a> and Walgreen.&nbsp;</p>
<p><span>Still, it speaks to just how much activists are looking to put capital to work pushing for change at corporations, at a time when money has been extraordinarily cheap to hedge funds. </span></p>
<p>Wednesday, JANA founder Barry Rosenstein was joined by other hedge fund pros who happily proclaimed that their work as activists has become easier, <a href="http://www.businessinsider.com/salt-2015-activist-investing-panel-2015-5">thanks to increasingly receptive corporate boards</a>. It wasn't always the case, though.&nbsp;</p>
<p>"Maybe I'd get a call from a lawyer," years ago, after putting in a call to a CEO as an activist, Rosenstein said during his panel Wednesday. "Maybe they'd call the SEC."&nbsp;</p>
<p>Right now, at the SALT Conference in Las Vegas, there are plenty of panels featuring bankers, hedge fund pros and DC politicos spanning a range of topics. There are also plenty of meetings being coordinated between funds like JANA, and the investors they would like to have boost their AUM. JANA marketing pros were out in force at SALT, according to one attendee that spoke with Business Insider.&nbsp;</p>
<p>The source declined to provide specifics when pressed for details about JANA's latest performance.&nbsp;</p><p><a href="http://www.businessinsider.com/source-jana-partners-has-moved-40-of-its-positions-into-activist-stakes-2015-5#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/game-of-thrones-economics-2015-3">'Game of Thrones': The Iron Throne is a terrible investment</a></p> http://www.businessinsider.com/einhorn-rips-into-ge-in-letter-2015-4David Einhorn really ripped into GE in his fund's quarterly letterhttp://www.businessinsider.com/einhorn-rips-into-ge-in-letter-2015-4
Mon, 20 Apr 2015 15:26:00 -0400Julia La Roche
<p><img style="float:right;" src="http://static2.businessinsider.com/image/55354b47eab8ea211a8b456a-1200-924/david-einhorn-53.jpg" border="0" alt="david einhorn"></p><p>Closely-followed hedge fund manager David Einhorn, the CEO of Greenlight Capital, blasted General Electric Co. in his fund's first quarter letter.</p>
<p><span>Earlier this month,&nbsp;</span><a href="http://www.businessinsider.com/r-ge-close-to-selling-part-or-all-of-its-real-estate-holdings-wsj-2015-4">GE announced plans</a><span>&nbsp;to exit most of its $500 billion GE Capital business and sell its $26.5 billion real-estate portfolio.&nbsp;</span><span>GE also said that it expects a $16 billion after-tax charge in the first quarter of 2015, with about $12 billion of that being non-cash.</span></p>
<p><span>Einhorn sees GE's exit as a success of Dodd-Frank financial reform.&nbsp;</span></p>
<p>"That GE chose to exit and finally own up to its cumulative chicanery rather than face its first Fed-supervised stress test is one of the first real successes of Dodd-Frank," Einhorn wrote.&nbsp;</p>
<p><span style="line-height: 1.5em;">Here's the excerpt from the letter (emphasis ours): &nbsp;</span></p>
<p class="p1" style="padding-left: 30px;">"Top-down: Valuations are on the high side and earnings are in a precarious spot. Last&nbsp;<span style="line-height: 1.5em;">year’s snow slowed the entire economy, setting up the first quarter to be the easiest&nbsp;</span><span style="line-height: 1.5em;">comparison quarter of the year. It nonetheless hasn’t turned out to be a good quarter&nbsp;</span><span style="line-height: 1.5em;">(despite this year’s snow confining itself mostly to New England). At year-end, first&nbsp;</span><span style="line-height: 1.5em;">quarter earnings were supposed to grow about 5%, but now, they are expected to decline&nbsp;</span><span style="line-height: 1.5em;">by a similar amount, and this doesn’t even include GE’s large, anticipated first-quarter&nbsp;</span><span style="line-height: 1.5em;">charge as it exits most of GE Capital.</span></p>
<p style="padding-left: 30px;"><span style="line-height: 1.5em;">"GE’s staggering $16 billion after-tax charge will drain another 5-7% from the S&amp;P 500 quarterly earnings. Given that GE is exiting these portfolios after several years of economic and valuation recoveries and still has to take an enormous loss,<strong> the gigacharge adds clarity to the multi-decade debate about the integrity of GE’s reported results. That GE chose to exit and finally own up to its cumulative chicanery rather than face its first Fed-supervised stress test is one of the first real successes of Dodd-Frank.&nbsp;</strong></span></p>
<p class="p1" style="padding-left: 30px;">"Even if this quarter’s S&amp;P earnings will ultimately be somewhat better than -5%&nbsp;<span style="line-height: 1.5em;">(excluding the GE charge) versus the first quarter of 2014 due to “lower and beat”, this&nbsp;</span><span style="line-height: 1.5em;">level of earnings degradation poses a risk to a market trading at a premium multiple of&nbsp;</span><span style="line-height: 1.5em;">earnings assisted by record high margins. The full year S&amp;P earnings outlook is even&nbsp;</span><span style="line-height: 1.5em;">worse, as the comparisons become more challenging."</span></p>
<p><span style="line-height: 1.5em;">Greenlight Capital fell 1.7% during an "uneventful and unprofitable" first quarter, according to the fund's quarterly investor letter.&nbsp;</span></p><p><a href="http://www.businessinsider.com/einhorn-rips-into-ge-in-letter-2015-4#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/time-saving-formatting-shortcuts-excel-microsoft-spreadsheet-2015-4">6 shortcuts in Excel that will save you a ton of time</a></p> http://www.businessinsider.com/r-ge-in-talks-to-sell-74-billion-portfolio-to-wells-fargo--2015-4GE is reportedly in talks to unload its massive $74 billion US commercial loan portfoliohttp://www.businessinsider.com/r-ge-in-talks-to-sell-74-billion-portfolio-to-wells-fargo--2015-4
Mon, 20 Apr 2015 12:22:00 -0400Mike Stone and Lewis Krauskopf
<p><img style="float:right;" src="http://static4.businessinsider.com/image/5500bf4969bedd4a596f3b2c-1200-924/general-electric-1.jpg" alt="general electric" border="0"></p><p>(Reuters) - General Electric Co is in early-stage talks with Wells Fargo &amp; Co about selling its entire $74 billion U.S. commercial lending and leasing (CLL) portfolio to the bank, according to a source familiar with the situation.</p>
<p>Other parties may also hold talks with GE about buying the entire U.S. CLL portfolio, the source said. GE is also exploring selling the U.S. CLL portfolio piecemeal and could decide to break the business up, the source added.</p>
<p>The source asked not to be identified because the talks are confidential. GE and Wells Fargo declined to comment.</p>
<p>The talks with Wells Fargo underscored GE's urgency in looking to dismantle its GE Capital business and free itself from the financial regulatory pressures that come with it.</p>
<p>GE earlier this month unveiled plans to exit the bulk of GE Capital over the next few years to focus more on industrial manufacturing.</p>
<p>(Reporting by Mike Stone and Lewis Krauskopf in New York; Editing by Jeffrey Benkoe)</p><p><a href="http://www.businessinsider.com/r-ge-in-talks-to-sell-74-billion-portfolio-to-wells-fargo--2015-4#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/how-much-sex-happy-couples-have-every-month-relationships-science-2015-3">Here's how much sex happy couples have every month</a></p> http://www.businessinsider.com/general-electric-earnings-q1-2015-4General Electric whiffs on revenue (GE)http://www.businessinsider.com/general-electric-earnings-q1-2015-4
Fri, 17 Apr 2015 07:54:40 -0400Akin Oyedele
<p><img style="float:right;" src="http://static3.businessinsider.com/image/51dd44ce6bb3f7d12500001b-600-/general-electric-sign-8.jpg" border="0" alt="General Electric Sign " width="600"></p><p></p>
<p>General Electric reported earnings that beat on the bottom line but whiffed on the top line.</p>
<p><span style="line-height: 1.5em;">Earnings per share came in at 31 cents excluding items, just beating the estimate by one cent.</span></p>
<p><span>Revenues fell 12% to $29.4 billion and excluding the impact from the GE Capital spinoff, revenues fell 3% to $33.1 billion.</span></p>
<p><span style="line-height: 1.5em;">The spin off of GE Capital impacted EPS by 6%, the company said.&nbsp;GE Capital revenues fell 39% to $5.98 billion.</span></p>
<p>CEO Jeff Immelt said in the <a href="http://www.ge.com/investor-relations/ir-events/ge-1st-quarter-2015-earnings-webcast">release</a>: "We have laid out a clear plan to reshape GE for the future. We will reduce the size of our financial business through the sale of most GE Capital assets over the next 24 months, with the potential to return more than $90 billion to investors in dividends, buyback and the Synchrony exchange through 2018. Our industrial businesses are performing well and we will continue to invest in our competitive advantages built on the GE Store."</p>
<p>Shares fell by up to 1% in pre-market trading.</p>
<p>Last Friday, the company announced that <span style="line-height: 1.5em;">it's&nbsp;</span><a href="http://www.businessinsider.com/r-ge-close-to-selling-part-or-all-of-its-real-estate-holdings-wsj-2015-4">selling the bulk of its GE Capital assets</a><span style="line-height: 1.5em;">.&nbsp;</span><span style="line-height: 1.5em;">The company will sell</span><span style="line-height: 1.5em;">&nbsp;most of its real estate portfolio worth around $26 billion to buyers including Wells Fargo and Blackstone. It also said it plans to buy back about $50 billion worth of shares.</span></p><p><a href="http://www.businessinsider.com/general-electric-earnings-q1-2015-4#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/charge-iphone-faster-apple-battery-life-2015-2">How to supercharge your iPhone in only 5 minutes</a></p> http://www.businessinsider.com/what-wall-street-stands-to-lose-from-the-ge-capital-spinoff-2015-4Wall Street stands to lose a lot with the GE Capital spinoffhttp://www.businessinsider.com/what-wall-street-stands-to-lose-from-the-ge-capital-spinoff-2015-4
Tue, 14 Apr 2015 16:42:44 -0400Portia Crowe
<p><img style="float:right;" src="http://static1.businessinsider.com/image/552d784f6bb3f70f61b931f0-1200-924/jeffrey-immelt-3.jpg" border="0" alt="Jeffrey Immelt"></p><p>General Electric is <a href="http://www.businessinsider.com/r-ge-close-to-selling-part-or-all-of-its-real-estate-holdings-wsj-2015-4">spinning off its financial services unit</a>, GE Capital, and with it will go a huge chunk of business for Wall Street.</p>
<p>The multinational conglomerate had been, until now, Wall Street's best corporate client, forking out up to $5.1 billion to investment bankers over the past 15 years,&nbsp;<a href="http://www.nytimes.com/2015/04/14/business/dealbook/general-electrics-days-as-wall-streets-golden-goose-may-be-numbered.html?ref=business&amp;_r=0">reports Antony Currie for The New York Times</a>.</p>
<p>Most of GE's $300 million-a-year bond sales business, for example, came from GE Capital.</p>
<p>Now, the financial unit is already starting to cut back on activity, including an anouncement on Friday that it would scale back its commercial paper business.</p>
<p>The deal-making itself has provided some business for Wall Street&nbsp;– for both big and small institutions, including the&nbsp;<a href="http://www.businessinsider.com/centerview-partners-wins-advisory-fees-on-another-deal-2015-4">emerging star boutique Centerview Partners</a>.</p>
<p>But it looks like, in other departments, Wall Street has a lot to lose.</p>
<p><a href="http://www.nytimes.com/2015/04/14/business/dealbook/general-electrics-days-as-wall-streets-golden-goose-may-be-numbered.html?ref=business&amp;_r=0"><strong>Read the full story in The New York Times »</strong></a></p><p><a href="http://www.businessinsider.com/what-wall-street-stands-to-lose-from-the-ge-capital-spinoff-2015-4#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/sallie-krawcheck-biggest-mistake-2014-12">Why 'Get It In Writing' Is Sallie Krawcheck's Biggest Takeaway From Her Wall Street Career</a></p> http://www.businessinsider.com/creditors-ended-up-with-the-short-end-of-the-stick-in-the-ge-deal-2015-4GE's historic deal was a huge win for shareholders ... at the expense of GE's creditorshttp://www.businessinsider.com/creditors-ended-up-with-the-short-end-of-the-stick-in-the-ge-deal-2015-4
Mon, 13 Apr 2015 11:23:00 -0400Wolf Richter
<p><img style="float:right;" src="http://static3.businessinsider.com/image/552bddb66bb3f75d14bd5121-603-452/general-electric-10.png" alt="general electric" border="0"></p><p>GE’s announcement that it would shed the bulk of the assets held by GE Capital is a doozie of a deal.</p>
<p>GE Finance, the seventh largest financial institution in the US, generated $43 billion in revenues in 2014, compared to $108 billion of GE’s industrial operations.</p>
<p>GE Capital is so big that it has been designated a “systemically important financial institution.” Regulators are crawling all over these SIFIs. And it seems GE wants to get them out of its hair.</p>
<p>GE has been trimming down its financial operations since the Financial Crisis. Back in 2007, GE Capital, sporting an ending net investment (ENI) of $580 billion, generated 57% of GE’s revenues. By now it’s down to 25%. After the deal is implemented and $200 billion in financial assets have been sold, ENI drops to $90 billion. By then, GE Capital’s revenues are expected to be a mere 10% of total revenues.</p>
<h2>GE is immensely smart.</h2>
<p>It got bailed out by the Fed during the Financial Crisis when it was running out of liquidity – having borrowed short-term for long-term investments, among other sins. TARP was peanuts compared to the money the Fed handed out. The New York Fed handled these bailouts. And who was a <a href="http://www.newyorkfed.org/newsevents/news/aboutthefed/2011/an110428.html">director of the New York Fed</a> at the time? GE’s CEO Jeff Inmelt.</p>
<p>So now he wants to “create a simpler, more valuable industrial company by selling most GE Capital assets,” GE <a href="http://www.genewsroom.com/press-releases/ge-create-simpler-more-valuable-industrial-company-selling-most-ge-capital-assets">claimed</a> on Friday.</p>
<p>But there’s a price: On “day one,” income will get hit by $16 billion in charges, including a $2.4 billion loss on the sale of its commercial property assets, $6 billion in taxes payable on “repatriating” $36 billion in cash, and $5 billion in impairments. GE also expects an additional $7 billion in costs, for a “total exit impact” of $23 billion, wiping out most of its $28 billion in 2013 and 2014 net income. Becoming more “valuable” is expensive.</p>
<h2>Did GE sell at the Peak of the Commercial Property Bubble?</h2>
<p><img style="float:right;" src="http://static1.businessinsider.com/image/552bb48eeab8eab365187244-234-342/screen shot 2015-04-13 at 8.19.35 am.png" alt="commercial property" border="0">GE confessed to be a market timer: It’s a “strong seller’s market for financial assets,” it said.</p>
<p>So it’s dumping its commercial property assets of $26.5 billion. Funds managed by Blackstone agreed to buy the bulk of the assets of GE Capital Real Estate. Wells Fargo will pick up a portion of the performing loans. Other buyers have agreed to buy another $4 billion in commercial property assets.</p>
<p>It’s an “excellent environment for creating value from financial assets,” GE said.</p>
<p>Commercial property prices have soared 87% from May 2009, according to the <a href="http://www.greenstreetadvisors.com/about/page/cppi/">Green Street Commercial Property Index</a> (CPPI), and are now 14% higher than they were in September 2007, at the peak of the prior crazy commercial property bubble that collapsed so spectacularly. GE is selling during what might turn out to be the final phase of an even crazier commercial property bubble. Impeccable timing.</p>
<h2>There are some quirks, however.</h2>
<p>GE is selling the assets of GE Capital, but it’s not shedding the liabilities: as part of the deal, it will fully and unconditionally guarantee $210 billion in GE Capital debt. So it’s still on the hook for the $210 billion. But most of the assets are gone, and so are the $43 billion in revenues.</p>
<p>To cover up the loss of income from GE Capital on an earnings-per-share basis, it would buy back $50 billion of its own shares by 2018, GE said. This will be the second largest share buyback program ever, after Apple’s $90 billion program announced in early 2014. This comes after GE’s $35 billion buyback announced in December 2012. GE doesn’t have this kind of cash flow, not anywhere near. So it will have to borrow much or all of this money. Hence more debt with fewer assets to support it. To top it off, GE will continue to pay out rich dividends.</p>
<p>Ironically, when GE announced the Alstom acquisition last year, it claimed that it would exercise some restraint in these sorts of things. But that was last year.</p>
<p>Selling $200 billion in financial assets, remaining on the hook for $210 billion in associated debt, incurring $23 billion in costs to do so, and buying back $50 billion in shares mostly with borrowed money amounts to a masterpiece of financial engineering designed to trick up its earnings per share. Not many companies can pull this off.</p>
<h2>But Moody’s had a cow.</h2>
<p><img style="float:right;" src="http://static5.businessinsider.com/image/4f59588d6bb3f74e6a00000d-900-675/ge-5.jpg" alt="general electric" border="0">And it <a href="https://www.moodys.com/research/Moodys-Downgrades-GEs-Senior-Unsecured-Debt-Rating-to-A1--PR_322434">slashed</a> GE’s credit rating. It saw “a growing level of financial risk tolerance, in favor of equity holders and at the expense of creditors.”</p>
<p>And it’s the creditors that Moody’s serves. Here are some peppery highlights:</p>
<p style="padding-left: 30px;">The pending GE Capital asset sales, with virtually all benefits inuring to equity owners, taken together with high share repurchase activity and a high dividend payout in recent periods, and the liquidity-consuming Alstom acquisition that is still pending, reflect a noteworthy shift by GE to more aggressive financial policies.</p>
<p style="padding-left: 30px;">GE has been increasing cash payments to shareholders for several years but has not yet achieved a commensurate increase in operating earnings and cash flow.</p>
<p style="padding-left: 30px;">In fact, the reduction of earnings and dividends from GE Capital during a period of heavy investment by GE and under difficult market conditions for many of GE’s industrial business lines will further undercut financial ratios that we already expected to be weaker than peers at the same rating level over the next several years….</p>
<p style="padding-left: 30px;">Moreover, the full and unconditional guarantee from GE of all existing GE Capital debt imposes additional overhang relative to the current income maintenance agreement and further exacerbates the declining leverage profile that is already heavily strained by substantially underfunded pension liabilities.</p>
<p style="padding-left: 30px;">The current cash consumptive stage of GE’s business cycle and ongoing heavy capital spend as anticipated will continue to constrain the company’s free cash flow generating capability and earnings over the next few years.</p>
<p>In other words, creditors end up with the short end of the stick.</p>
<h2>So to heck with the creditors.</h2>
<p>And with risks and leverage. So be it that the guarantees, if called upon, would break the company. It can always get bailed out again by the Fed. There are in fact no more risks in the financial world. The Fed has removed them from the calculus.</p>
<p>It was a masterful stroke of “aggressive,” as Moody’s said, financial engineering! It will be talked about for years to come. It will be the model to follow. GE shares had been in decline since December 31, 2013, despite all prior efforts at financial engineering, including $35 billion in share buybacks. And so the mere announcement on Friday caused Wall Street to foam at the mouth, and the languishing shares jumped nearly 11% in a single day! That’s how you do it!</p>
<p>But the Fed, which has encouraged this sort of thing, is now clueless how to unscramble its omelet. It fears “outsized market reaction” to even the smallest moves. Other central banks keep adding to the omelet. Absurdity reigns. Read… <a href="http://wolfstreet.com/2015/04/09/fed-clueless-how-unwind-absurd-monetary-policies-other-central-banks-adding-to-it/">Keep Pushing Until Something Really BIG Breaks</a>?</p><p><a href="http://www.businessinsider.com/creditors-ended-up-with-the-short-end-of-the-stick-in-the-ge-deal-2015-4#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/what-earth-would-look-like-if-ice-melted-world-map-animation-2015-2">Animated map of what Earth would look like if all the ice melted</a></p> http://www.businessinsider.com/general-electric-share-price-april-10-2015-4General Electric is surging (GE)http://www.businessinsider.com/general-electric-share-price-april-10-2015-4
Fri, 10 Apr 2015 14:50:00 -0400Akin Oyedele
<p><img style="float:right;" src="http://static1.businessinsider.com/image/5527bf4a69beddf76d40432e-1200-924/rocket-taking-off-liftoff-surge-1.jpg" border="0" alt="rocket taking off liftoff surge"></p><p>General Electric is surging.</p>
<p>Shares of the company are up by over 10% following news that it's <a href="http://www.businessinsider.com/r-ge-close-to-selling-part-or-all-of-its-real-estate-holdings-wsj-2015-4">selling the bulk of its GE Capital assets</a>.</p>
<p>The company will sell<span style="line-height: 1.5em;">&nbsp;most of its real estate portfolio worth around $26 billion and the company also announced plans to buy back about $50 billion worth of shares.</span></p>
<p>Shares closed about 3% higher on Thursday after initial reports that the company was looking to offload some of these assets.</p>
<p>Analysts at Barclays said the sale of GE Capital was "<a href="http://www.businessinsider.com/barclays-on-general-electric-asset-sales-2015-4">good riddance</a>," because investors now have a clearer picture of the company's business mix, and it has shed risks associated with banking.</p><p><a href="http://www.businessinsider.com/general-electric-share-price-april-10-2015-4#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/timing-of-ge-capital-real-estate-deal-2015-4This was the perfect time for GE to do this mega-dealhttp://www.businessinsider.com/timing-of-ge-capital-real-estate-deal-2015-4
Fri, 10 Apr 2015 12:43:00 -0400Sam Ro
<p><img style="float:right;" src="http://static6.businessinsider.com/image/5527e5d96bb3f7382128a776-799-599/back-to-the-future-clock-time-2.jpg" border="0" alt="back to the future clock time"></p><p>General Electric announced it would be <a href="http://www.businessinsider.com/r-ge-close-to-selling-part-or-all-of-its-real-estate-holdings-wsj-2015-4">unloading most of its GE Capital assets</a> in a deal involving the sale of&nbsp; approximately $26.5 billion worth of real estate.</p>
<p>We can't help but wonder what that means that they'd be willing to unload so much real estate. Do they think the commercial real estate market is peaking? Do they think it's about to collapse? If they think the economy is growing, why not wait?</p>
<p>Why now?</p>
<p>Simply put, now was the perfect time because there was a buyer.</p>
<p>Let's unpack this a bit. There are three points to expand on.</p>
<h3>1. Commercial real estate prices are way up.</h3>
<p>After crashing during the financial crisis, commercial real estate prices have roared back. According to a report from Green Street Advisors (<a href="http://www.forbes.com/sites/erincarlyle/2015/04/09/30-billion-ge-real-estate-asset-sale-could-provide-cash-reduce-headache/">via Forbes</a>), prices are now 15% higher than they were at the top of the credit bubble. So, GE isn't exactly taking a bath on this sale.</p>
<p><img src="http://static3.businessinsider.com/image/5527fc7c6bb3f7bf7e28a77b-1261-572/screen shot 2015-04-10 at 12.31.04 pm.png" border="0" alt="cre"></p>
<p>GE could wait and see if prices go higher. But why take the risk? Even assuming they are going higher, most economists are telling us that financing costs are likely to trend higher from here.</p>
<h3>2. Borrowing costs are expected to rise.</h3>
<p>Interest rates have been tumbling for basically 15 years. In other words, the bond market has been in a very long bull market. The ride's definitely been a bit bumpier in the private debt markets than in the public debt markets.</p>
<p>Lately, economists and bond market gurus have had growing conviction that rates are going to trend higher in the years to come. Higher interest rates mean the cost of borrowing rises, which makes it more unattractive to finance any deal.</p>
<p><img src="http://static2.businessinsider.com/image/5527f5d3ecad04a329d03748-2680-1780/fredgraph-110.png" border="0" alt="rates"></p>
<p>Still, why not wait a little? Rates are still low and prices are trending higher. It's possible GE could get a better valuation.</p>
<h3>3. There is a buyer.</h3>
<p>This is probably the most underappreciated aspect of any transaction: there is no deal without a buyer <em>and</em> a seller.&nbsp;And this is something that is increasingly critical when you're talking about bigger deals.</p>
<p>Generally speaking, this is what market liquidity is all about. Markets are more liquid when buyers and sellers can easily find each other and close deals at fair prices.&nbsp;<span style="line-height: 1.5em;">But it's always worth keeping in mind that an asset won't sell just because it's worth something: an asset up for sale needs a buyer <em>or else there is no market.</em>&nbsp;</span></p>
<p>This is the scary characteristic of illiquid markets. <a href="http://www.businessinsider.com/howard-marks-liquidity-definition-2015-3">Oaktree Capital's Howard Marks wrote about this last month:</a></p>
<p style="padding-left: 30px;"><strong>"</strong>Sometimes people think of liquidity as the quality of something being readily saleable or marketable ... But the more important definition of liquidity is this one from Investopedia: 'The degree to which an asset or security can be bought or sold in the market <em>without affecting the asset's price.'</em>(Emphasis added) <strong>Thus the key criterion isn’t 'can you sell it?' It’s 'can you sell it at a price equal or close to the last price?'</strong>"</p>
<p>And there were buyers for what GE was selling today.</p>
<p>So when you're talking about turning a profit on an asset that is worth of tens of billions of dollar — that you were going to sell anyway — the right decision is clear.</p>
<p>Sell.</p><p><a href="http://www.businessinsider.com/timing-of-ge-capital-real-estate-deal-2015-4#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/what-earth-would-look-like-if-ice-melted-world-map-animation-2015-2">Animated map of what Earth would look like if all the ice melted</a></p>